What used to be dismissed as a bogeyman by real estate professionals is now a reality of unknown capacity: homes that fall into the shadow inventory of foreclosure.
The December report from Lending Processing Services indicates that one in every seven-and-a-half properties are either behind on payments or in foreclosure and that “more than 4 percent of the loans that were current in December 2008, fell behind by 60 days or more, including foreclosure, by the end of November 2009. It’s the highest rate for that part of the year since LPS began reporting the data.”
The foreclosure inventory continues to stack-up as the foreclosure rate in November reached 3.19 percent, a 1.46 percent increase from the previous month and an 81.41 percent increase from November 2008.
This inventory, however, doesn’t factor in the so-called “shadow inventory of foreclosure.” Housing Wire cites data from First American CoreLogic that puts that shadow inventory in the 1.7 million range as “the roadblocks of the government incentive programs and moratoriums clog the foreclosure pipeline.”
The Home Affordable Modification Program (HAMP), while having slowed down foreclosure starts, has largely been seen as ineffective in creating modifications on a permanent basis and, in many cases, only delayed foreclosure starts for already troubled properties.